Planned housing benefit reforms may force vulnerable people to leave supported housing settings for residential care or to return to their families, says a coalition of charities.

A coalition of 37 bodies is warning that many disabled people may be forced to leave supported housing settings for residential care or to return to their families as a result.

Consultation on the proposals closes on Sunday.

The plans would overhaul the system of “exempt accommodation”, under which housing benefit meets the full cost of specialist social housing for vulnerable groups. This is typically much higher than benefits paid out to meet mainstream housing rents because of additional staffing and management costs.

The Department for Work and Pensions is proposing to limit payments for people with lower-level support needs in homeless hostels, domestic violence refuges and sheltered housing for older people to the level of local housing allowance – the housing benefit paid to private tenants – plus a fixed sum.

Those who need more intensive support to live independently in the community and hence more expensive accommodation, such as people with learning disabilities, could receive more assistance after application to the local authority, though funding for this would also be limited. Although the DWP said it wanted the changes to be cost-neutral, it was proposing to control the rising costs of exempt accommodation benefits.

In its consultation response, Mencap warned the reforms would make it more difficult for providers to maintain or invest in specialist housing as more people with learning disabilities wanted to live independently.

It said the current “right” to higher housing benefit for specialist housing would be eroded by giving councils a limited pot with which to fund payments, which could itself be raided if the money was not ring-fenced.

“This will mean that individuals will either be moved back into institutions miles away from their friends and families, or that families will be the ones picking up the pieces,” said David Congdon, Mencap’s head of campaigns and policy.

A similar fate could befall people with autism in this form of housing, warned Sarah Lambert, head of policy at the National Autistic Society.

In its response, supported housing umbrella body Sitra said the proposals “placed in jeopardy the homes and the wellbeing of thousands of highly vulnerable people to many of whom no local authority accepts it has a statutory duty”. It said it did not believe a distinction could be made between lower-level and more specialist supported housing on which to base different levels of benefit.

Homeless Link also attacked the proposals, saying that, amid increasing costs for specialist housing providers and cuts in Supporting People funding, there was “simply no capacity to have funding reduced and continue to provide a service at current levels”.

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